Fiscal deficit 27% of full-year target between April and August, current account deficit rises

New Delhi| According to the data released by the government, the fiscal deficit of the Center reached 27 percent of the full-year target at the end of the first five months of the current financial year. According to data released by the Comptroller General of Accounts (CGA), the overall fiscal deficit-the gap between expenditure and revenue – stood at Rs 4,35,176 crore by the end of August. In the same period of 2023-24 this deficit was 36 per cent of the budget estimate (BE).

In the Union Budget, the government has projected to bring the fiscal deficit to 4.9 per cent of gross domestic product (GDP) in the current fiscal year 2024-25. In 2023-24, this deficit was 5.6 percent of GDP. Overall, the government aims to limit the fiscal deficit to Rs 16,13,312 crore during the current fiscal year.

Revealing central government revenue-expenditure data for the first five months of 2024-25, the CGA said net tax revenue for the current fiscal year stood at Rs 8.7 lakh crore, or 33.8 per cent of the budget estimate. Net tax revenue collection as of the end of July 2023 was 34.5 percent. The total expenditure of the central government in the four months to August stood at Rs 16.5 lakh crore, or 34.3 per cent of the budget estimate. In the same period a year ago, this expenditure was 37.1 per cent of the budget estimate.

Of the total expenditure, Rs 13,51,367 crore was in the revenue account and Rs 3,00,987 crore in the capital account. Of the total revenue expenditure, Rs 4,00,160 crore was for interest payments. Fiscal deficit is the difference between the total expenditure and revenue of the government. This is an indicator of the total borrowing of the government.

On the other hand, India’s current account deficit increased marginally to 1.1 per cent of GDP in April-June. The country’s current account deficit widened marginally to $9.7 billion, or 1.1 percent of GDP, in April-June 2024, compared to $8.9 billion, or one percent, in the same period a year earlier, the Reserve Bank of India said on Monday. This significant figure, reflecting the country’s strength, follows a surplus of US$ 4.6 billion, or 0.5 per cent of GDP, previously recorded in the January-March quarter.

The Reserve Bank has attributed the year-on-year increase in the current account deficit to the increase in the commodities trade deficit, which was recorded at USD 65.1 billion in the first quarter of FY2025, compared to USD 56.7 billion in the same period a year earlier

The RBI said net service receipts increased to $39.7 billion during the quarter under review from $35.1 billion a year ago. At the same time, computer services, trade services, travel services and transport services showed an increase.

However, the RBI said there was a sharp decline in net foreign portfolio investment and it declined to $0.9 billion during the first quarter from $15.7 billion a year ago.